Chapter 11: Payment Systems For Electronic Commerce. Objectives. In this chapter, you will learn about: The basic functions of online payment systems The use of payment cards in electronic commerce The history and future of electronic cash How electronic wallets work

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Chapter 11: Payment Systems For Electronic Commerce

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Electronic Cash

Term that describes any value storage and exchange system created by a private entity that:

Does not use paper documents or coins

Can serve as a substitute for government-issued physical currency

Micropayments and Small Payments

Micropayments

Internet payments for items costing from a few cents to around $1

Small payments

Payments of less than $10

Privacy and Security of Electronic Cash

Concerns about electronic payment methods include:

Privacy and security

Independence

Portability

Convenience

Advantages of electronic cash include being:

Independent and portable

Holding Electronic Cash: Online and Offline Cash

Online cash storage

Trusted third party is involved in all transfers of electronic cash

Holds consumers’ cash accounts

Offline cash storage

Virtual equivalent of money kept in a wallet

No third party is involved in the transaction

Double-spending

Spending electronic cash twice

Advantages and Disadvantages of Electronic Cash

Advantages of electronic cash:

Transactions are more efficient

Costs less than processing credit card transactions

Disadvantages of electronic cash:

No audit trail

Money laundering and fraud

Susceptible to forgery

Electronic Cash Systems

CheckFree

Largest ACH (Automated Clearing House) in the world

Provides online payment processing services

Clickshare

Clickshare allows a consumer to have one account at a most-trusted website and buy from other websites without having to pass around a credit-card number, register or give out personal information. One ID, one account, one bill.